If the production possibilities curve for an economy were a straight line, what would this imply about the opportunity costs of the two products?

Introduction / Context:
In basic economics, the production possibilities curve, or PPC, shows different combinations of two goods that an economy can produce using all its resources efficiently. The shape of this curve conveys information about opportunity costs and resource adaptability. A bowed out curve indicates increasing opportunity costs, while a straight line PPC indicates constant opportunity costs. This question asks what a straight line PPC implies about the relationship between the two products and the resources used to produce them.

Given Data / Assumptions:

• The PPC under discussion is a straight line, not curved.
• The economy produces two different products.
• Options suggest different possible interpretations: resource substitutability, equal production, same prices or equal importance to consumers.
• We assume standard conditions of fixed resources and technology.
• Opportunity cost is measured as the amount of one good forgone to produce an additional unit of the other good.

Concept / Approach:
A straight line PPC implies that opportunity cost is constant along the entire curve. This means that every unit of one good forgone always yields the same amount of the other good, regardless of the production mix. Constant opportunity cost occurs when resources are equally suited to producing both goods and can be transferred from one to the other without loss in productivity. In other words, economic resources are perfectly substitutable between the two products. Therefore, the correct statement is the one that emphasises perfect substitutability of resources, not equal production, identical prices or equal consumer importance.

Step-by-Step Solution:
Step 1: Recall that the slope of the PPC indicates the opportunity cost of one good in terms of the other. Step 2: Understand that for a straight line PPC, the slope is constant, so the opportunity cost does not change as production shifts. Step 3: Recognise that constant opportunity cost is a special case, typically when resources are equally productive in both uses. Step 4: Look at the options and identify which one describes this condition of resources being equally suitable for either product. Step 5: Select the option stating that economic resources are perfectly substitutable in the production of the two products.

Verification / Alternative check:
To verify, imagine an economy where all workers and machines can switch between producing two goods without any change in productivity. In such a case, giving up one unit of good A will always allow production of the same number of units of good B, no matter where on the PPC the economy currently operates. Graphically, this gives a straight line. In contrast, if resources are specialised, the PPC becomes bowed out and opportunity costs rise. Thus, the straight line shape clearly points to perfect substitutability of resources, not to equal production or identical consumer preferences.

Why Other Options Are Wrong:
Equal quantities of both products are produced at each possible point on the curve: This is not correct because different points on the PPC correspond to different combinations of the two goods, not equal quantities. The two products will sell at the same market price: Price equality is a separate concept and has nothing to do with the shape of the PPC or opportunity costs. The two products are equally important to consumers: Consumer importance or preferences are represented by indifference curves, not by the PPC, which reflects production possibilities. Any blank option: It does not provide an explanation of what the straight line PPC implies.

Common Pitfalls:
Some students confuse demand side concepts, such as consumer importance and prices, with supply side concepts like the PPC. Others think that a straight line might indicate equal production of the two goods, which is not what the curve shows. Remembering that the PPC is purely about production capabilities and trade offs helps keep the focus on opportunity cost and resource adaptability. Associating a straight line PPC with constant opportunity cost and perfect resource substitutability reduces the risk of selecting misleading options.

Final Answer:
If the production possibilities curve were a straight line, it would imply that economic resources are perfectly substitutable in the production of the two products, leading to constant opportunity costs.